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Internal Investigations: <i>Upjohn</i> Warnings Are No Longer Enough
Much has been written recently about the government's continued insistence, in both criminal and SEC enforcement investigations, that corporations waive the attorney-client privilege in order to 'fully cooperate' with the government. This pressure has been augmented by the increasing reluctance of auditors for public companies to sign off on their audits unless they review the client's internal investigatory report ' an act that also may cause waiver of the privilege. See, In re: Subpoena Duces Tecum Served on Willkie Farr & Gallagher, (1997 WL 118369 (SDNY 1997)). What has received less attention is the countervailing pressure for truth and candor toward prospective witnesses, not only by government attorneys in the context of parallel criminal and civil investigations, but also by private attorneys when conducting corporate internal investigations. See, eg, Cal. Bus. & Prof. Code 6068(d): 'It is the duty of an attorney to ' employ ' those means only as are consistent with the truth.' See also, U.S. District Court ” Northern District Local Rules, Rule 11-4(a)(4), requiring members to '[p]ractice with the honesty, care and decorum required for the fair and efficient administration of justice;' and Cal. Rule of Prof. Resp. 3-600 requiring lawyers representing corporations to 'not mislead [a corporate officer or employee] into believing that the [person] may communicate confidential information to the member in a way that will not be used in the organization's interest if that is or becomes adverse to the [person].'
The increased likelihood in the post Sarbanes-Oxley world that a corporation will waive the privilege and produce the substance of its internal investigation, including its investigative reports, needs to be juxtaposed with the duty to be honest with a corporation's employees when conducting an internal investigation. The relationship of these two duties raises serious doubt that the standard Upjohn warnings ' ie, we represent the company, our conversation is privileged, but the company may 'waive' the privilege in its sole discretion ' is consistent with the reasonable expectations of employees and a lawyer's ethical duty to be honest and candid. Giving a more fulsome warning to employees may now be more appropriate, but absent a court decision or at least implicit recognition of this dilemma by the government, it may be difficult for a corporation that does so to effectively investigate and self-govern.
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